Large international companies have strongly encouraged the country to increase its renewables target, allow more renewable sourcing options for corporates, and use these options to better channel private investment into quicker renewable energy roll out. Strong leadership on climate change will enhance Indonesia’s geopolitical standing, drive sustainable economic growth, and encourage substantial skilled job creation, says the letter.
Jakarta, 9 September 2024 – Some 430 large global businesses have strongly encouraged Indonesia to increase its ambition on renewable electricity and unlock greater investment in the country’s energy transition. In a letter to President Joko Widodo of Indonesia, penned by CEO Helen Clarkson of Climate Group on behalf of RE100’s 430+ member companies, the letter warns that failing to do so will influence corporate investment in Indonesia. The letter urges Indonesia to get ready for upcoming carbon tariff regulations, such as the EU’s Carbon Border Adjustment Mechanism and Australia’s Carbon Tariff, that are pushing for greener supply chains from large corporates.
This letter, also copied to the President-elect of Indonesia and several ministries, specifically encourages Indonesia to focus on renewables in the redraft of its National Energy Plan and other upcoming policies. It outlines three key areas that RE100 members consider critical to unlocking private investment in Indonesia’s renewable future. First, increasing ambition by setting a 34% renewable energy target for 2030. Second, accelerating the quantity and pace of new renewable projects connecting to the grid. Third, creating an electricity market that offers more direct sourcing options between corporate buyers and electricity producers, with an emphasis on renewable energy power wheeling.
RE100, Climate Group’s global initiative that brings together over 430 of the world’s biggest companies, including 121 companies operating in Indonesia, represents 2.1 TWh of the country’s electricity consumption. For comparison, in 2023, Indonesia’s electricity sales (consumption) reached 285 TWh. RE100 members are committed to using 100% renewable electricity by 2050 at the latest, including those with production facilities and suppliers in Indonesia. Currently, no companies headquartered in Indonesia have become members of RE100. On August 21, 2024, the partnership between RE100 and the Institute for Essential Services Reform (IESR) was officially launched at the Indonesia Solar Summit 2024.
Encouraged by the steps already taken in the country’s Net Zero Plan, Indonesia has an important opportunity to realize the economic and social benefits of the energy transition by increasing the availability, affordability and accessibility of renewable electricity, said the RE100 letter. Strong leadership on climate change will send a strong market signal on the future of renewables in Indonesia, enhance Indonesia’s geopolitical standing, drive sustainable economic growth, and encourage substantial skilled job creation, the letter continued.
“At COP28 in 2023, more than 130 countries pledged to triple installed renewable energy capacity by 2030, including many of Indonesia’s neighbours and competitors. This is a crucial moment for Indonesia to maintain its industrial and economic competitiveness by strengthening leadership in the renewable energy sector. Large global businesses are looking for more ambition and greater investment in renewables in Indonesia, so that they can confidently up their investment in renewables in support of their RE100 targets. The National Energy Plan with ambitious targets is crucial for determining Indonesia’s commitment to net zero,” added Ollie Wilson, Head of RE100, Climate Group.
Institute for Essential Services Reform (IESR) Executive Director Fabby Tumiwa stated at the media briefing “Industry Call for Accelerating Renewable Energy in Indonesia” on Monday (September 9, 2024) that the credibility of companies in RE100 is determined by their achievements in renewable energy targets. He mentioned that if Indonesia fails to meet the renewable energy needs aligned with the business expansion plans of these companies, they are likely to choose other countries that offer better opportunities for utilizing renewable energy.
“Currently, the draft of the National Energy Plan is set to lower the renewable energy mix targets for 2025 and 2030. If this happens, it will raise concerns for these companies about meeting their 100% renewable energy targets by 2050 or sooner. Additionally, the debate over establishing power wheeling in the New Energy and Renewable Energy Bill is still ongoing. In fact, the power wheeling scheme for renewable energy could be an opportunity for RE100 companies to access green electricity,” said Fabby
Furthermore, Fabby also stated that RE100 is urging the Indonesian government to increase the quota for rooftop solar PV and to develop a green tariff that provides companies with opportunities to invest directly in renewable energy generation.
“Availability of renewable energy is crucial for the competitiveness of manufacturing countries like Indonesia, where the supply chains of RE100 members, such as Nike, operate. Currently, options for using renewable energy in Indonesia for these companies are still limited, such as through renewable energy certificates (RECs). However, these companies hope that in the future there will be additional options that leverage private capital through low-risk and cost-effective contract structures that encourage more renewable energy use, such as direct power purchase agreements, which have already started being implemented in other Asian countries like Vietnam and India,” explained Fabby.
In response to the RE100 letter and their efforts to use 100% renewable energy in production processes, Apit Pria Nugraha, Head of the Green Industry Center at the Ministry of Industry, considers this relevant for the industrial sector, particularly for reducing emissions in a sector that significantly contributes to Indonesia’s emissions. He supports the efforts to lower emissions through the use of renewable energy and sees an opportunity to adapt and adopt some of RE100’s technical criteria in developing decarbonization standards for the green industry in Indonesia.
About Institute for Essential Services Reform
Institute for Essential Services Reform (IESR) is a think-tank in the field of energy and environment, IESR encourage transformation into a low carbon energy system by advocating a public policy that rests on data-driven and scientific studies, conducting capacity development assistance, and establishing strategic partnerships with non-governmental actors
About RE100
RE100 is a global initiative bringing together the world’s most influential businesses committed to 100% renewable electricity. Led by Climate Group, our mission is to drive change towards 100% renewable grids, both through the direct investments of our members, and by working with policymakers to accelerate the transition to a clean economy. RE100 was established in partnership with CDP. The initiative has over 400 members, ranging from household brands to critical infrastructure and heavy industry suppliers.
About Climate Group
Climate Group drives climate action. Fast. Our goal is a world of net zero carbon emissions by 2050, with greater prosperity for all. We focus on systems with the highest emissions and where our networks have the greatest opportunity to drive change. We do this by building large and influential networks and holding organizations accountable, turning their commitments into action. We share what we achieve together to show more organizations what they could do. We are an international non-profit organization, founded in 2004, with offices in London, Amsterdam, Beijing, New Delhi and New York. We are proud to be part of the We Mean Business coalition. Follow us on Twitter @ClimateGroup.